The Department of the Treasury’s Office of Foreign Assets Control (OFAC) has designated a network comprising five entities and one individual, based in Russia and the Russia-occupied Georgian region of South Ossetia, for enabling illicit payment mechanisms between Russia and the Democratic People’s Republic of Korea (DPRK). This action targets parties that have assisted in sanctions evasion, supporting DPRK’s weapons programs and Russia’s war against Ukraine.
Russia, facing battlefield losses and international isolation, increasingly relies on the DPRK for weapons procurement and economic cooperation. The recent sanctions highlight illicit financial schemes that allow DPRK access to the international banking system, violating United Nations Security Council resolutions UNSCR 1718 and UNSCR 2270.
“Today’s action underscores our significant concern with efforts by Russia and the DPRK to deepen financial cooperation, in violation of UN Security Council resolutions,” said Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence Bradley T. Smith. “The United States remains strongly committed to leveraging all our available tools to disrupt this and other schemes intended to support Russia’s war of aggression against Ukraine and enable the DPRK’s illicit access to the international financial system.”
The action targets two state-run organizations from DPRK: Foreign Trade Bank (FTB) and Korea Kwangson Banking Corporation (KKBC), both listed on the 1718 Sanctions List. FTB is a twice-designated institution serving as DPRK’s primary foreign currency exchange bank crucial for financing its WMD programs. KKBC was designated in August 2009 under Executive Order (E.O.) 13382 for supporting WMD proliferators.
In a scheme led by the Central Bank of Russia, MRB Bank in South Ossetia acted as an intermediary for TSMRBank to establish a secret banking relationship with FTB. Dmitry Yuryevich Nikulin facilitated cash deposits from FTB through TSMRBank to MRB. He coordinated with DPRK representatives to ensure substantial transfers into FTB and KKBC accounts at MRB, some used for fuel exports from Russia to DPRK.
Separately, Russian Financial Corporation Bank JSC (RFC) collaborated with FTB to form Stroytreyd LLC in Moscow to reclaim frozen DPRK funds held in defunct Russian banks. RFC-owned Timer Bank transferred millions to Stroytreyd benefiting FTB. This collaboration aimed at enhancing financial ties between DPRK and Russia.
OFAC has designated MRB, RFC, Stroytreyd, TSMRBank under E.O. 13722 for assisting North Korea’s government or operating within Russia’s financial sector under E.O. 14024. Timer Bank is designated under both orders due to its affiliation with RFC.
Nikulin is designated under E.O. 13722 for aiding North Korea’s government financially or technologically and under E.O. 14024 as an official of TSMRBank.
Updated identifiers are published today for KKBC aliases used in operations within Russia.
All property interests related to these designations within U.S jurisdiction are blocked, necessitating reporting to OFAC. Transactions involving these properties by U.S persons are prohibited unless authorized by OFAC.
Non-U.S persons involved in transactions causing U.S sanctions violations may face penalties or enforcement actions according to OFAC guidelines.
OFAC emphasizes that sanctions aim not at punishment but at behavioral change consistent with legal processes outlined on their platform.
Click here for more information on today’s designations.
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